Brocade: Fiscal 4Q08 Financial Results

Brocade reported financial results for its fourth fiscal quarter and full fiscal year, which ended October 25, 2008. Brocade reported Q4 revenues of $398.5 million, GAAP net income of $38 million or $.10 per share, and net income of $75.8 million or $.20 per share on a non-GAAP basis.

Commenting on the Brocade’s fourth quarter and full fiscal year financial results, Michael Klayko, Brocade CEO, said: "Q4 was another outstanding quarter for Brocade, where we achieved record revenues and better-than-expected profitability fueled by our product and innovation advantages in our target markets. Our strong performance in Q4 accentuates an overall outstanding fiscal 2008, in which we achieved double-digit growth, expanded our margin and announced exciting plans to expand into additional, larger markets through our planned acquisition of Foundry Networks."

Fourth Fiscal Quarter 2008 Business Highlights

• Brocade announced the availability of a new family of fabric-based encryption platforms that helps customers by encrypting critical corporate data with high performance and centralized management. This solution offers integration with several management products including NetApp Lifetime Key Management and RSA Key Manager for the Datacenter.
• Brocade unveiled the Data Center Fabric Manager 10.0, a management application that helps customers secure the flow of data within and across multiple fabrics to increase productivity, scalability and operational efficiency. The solution integrates easily with existing third-party storage, server, and data center infrastructure management frameworks.
• Brocade announced in September that Brocade 415/425 and 815/825 host bus adapters (HBAs) had been certified for VMware ESX, allowing Brocade to release device drivers independently of VMware’s own product releases.
• Brocade introduced the Brocade 8 Gbit/sec Storage Area Network (SAN) Switch for the HP BladeSystem c-Class portfolio, the industry’s highest-performance embedded switch. The combined solution increases the network bandwidth of the HP BladeSystem c-Class technology and increases flexibility while reducing costs.
• Brocade announced continued collaboration with Oracle to help optimize Oracle applications and databases running Oracle Enterprise Linux and Oracle VM, with advanced capabilities delivered through Brocade’s Data Center Fabric (DCF) architecture and its broad portfolio of data center networking products.
• Brocade furthered its partnership with Microsoft, demonstrating a new server-to-storage area network (SAN) management productivity solution for Microsoft System Center that gives customers end-to-end data center fabric and host bus adapter (HBA) management capabilities, and provides recommendations for optimizing their system performance.

Fourth Fiscal Quarter 2008 Financial Highlights and Additional Financial Information

• Revenue for fiscal year 2008 was $1,466.9 million, a growth of 19% over fiscal year 2007.
• In Q4 08, Brocade achieved record revenue, 9% quarter on quarter growth and 17% year on year growth.
• Brocade’s total installed base of SAN ports was approximately 19.4 million.
• In Q4 08, Average Selling Price (ASP) declines were in the low single digits compared to Q3 08.
• In Q4 08, net stock-based compensation expense was $7.5 million and has been excluded from Brocade’s non-GAAP results.
• As of the end of Q3 08, Brocade suspended its share repurchase program in connection with the Foundry Acquisition. Therefore, in Q4 08, Brocade made no repurchases. As of the end of Q4 08, Brocade had $414.1 million remaining under its $800 million total stock buyback program authorization. Since Q4 07, Brocade reduced the total number of shares outstanding by over 15.5 million net, or by 4%.